Thursday, December 27, 2012

Price Check: Costco revelation

Back in 2006, I wrote an article about my experience checking out BJ's Wholesale Club, a local warehouse club. I went in with a free one-day pass and my price book and checked the prices on a lot of staple items (toilet paper, tuna, onions, etc.) to see how they compared to the deals we were getting at local supermarkets. My conclusion was that for the way we shop, BJ's just didn't offer much in the way of savings—certainly not enough to justify the $45 membership fee (which has since gone up to $50). So I just decided that for us, a warehouse club membership wasn't a good value.

Since then, we've gone back to BJ's a few more times, using either a one-day pass or a one-month trial membership, and I've seen nothing to make me revise this opinion of this particular store. However, until today, I didn't have much opportunity to check out Costco, another warehouse store, which has built a reputation around being the anti-Wal-Mart. Unlike BJ's, Costco doesn't offer trial memberships or day passes; it won't even allow a non-member to buy a gift card for a friend who has a membership, as I discovered when I tried to buy one for my sister a few years back. This experience soured me a bit on the store, so I decided, in fox-and-grapes fashion, that it probably wasn't worth bothering to check out their membership costs. After all, I figured, if BJ's wasn't a good deal, why would Costco be any better?

Well, it appears I was a bit too hasty. Today I made a trip out to Costco with my in-laws, and I must admit, it was a revelation. The main difference between Costco and BJ's was that Costco, with its focus on the high-end market, sells a lot more organic and Fair Trade products. This includes coffee, which I've been having a lot of trouble finding at local stores. Until recently, I was buying it five pounds at a time over the Internet from Dean's Beans, a Massachusetts-based dealer in Fair Trade coffee (and cocoa and sugar). But when the price on their decaffeinated beans went up to $45—which works out to about $11 a pound with shipping—I thought maybe I could do better buying it at the store. The problem is, while both my local supermarket and Trader Joe's carry some coffees that are Fair Trade certified and some that are decaffeinated, I couldn't find any that were both. I managed to pick up a bag of Caribou Coffee on sale at Target for about $8 a pound, but the regular price was higher than the cost of Dean's Beans, and the Rainforest Alliance certification it carries isn't as stringent as Transfair's. At this point, I was more or less resigned to paying $12 a pound from now on for the Equal Exchange coffee my local Ten Thousand Villages store carries. So you can imagine how my eyes popped when I walked along Costco's coffee aisle today and found a two-pound bag of their house brand coffee—whole bean, decaffeinated, and Fair Trade certified—for only $13. That's less per pound than a lot of the conventional brands at my supermarket.

Nor did the surprises stop there. Hard on the heels of this discovery, I found a five-pound sack of organic sugar for only $1 a pound. Up until now, the best price I'd ever seen was $1.40 a pound at Trader Joe's—and that's since gone up to $1.60 a pound. And I also spotted a couple of other nifty items at lower-than-average prices, like smoked salmon at $12 a pound rather than the $25 a pound I usually see at the supermarket. (Granted, this is more of a rare splurge than a staple item, but at $12 a pound, we might be able to go for it twice a year instead of once.)

So, there are at least a couple of staple items, like coffee and sugar, that are significantly cheaper at Costco. But would the savings on these items be enough to cover the $55 annual membership fee? Let's crunch the numbers: I probably go through about a pound of coffee per month, so 12 pounds per year would cost $78 per year, as opposed to $144 for the Equal Exchange coffee. That's a $66 savings right there, which would pay for the $55 membership fee with $11 to spare. Our sugar usage is harder to calculate, since it varies widely from month to month depending on how much baking we do, but if you estimate it at about a pound a month, that's an additional savings of $7.20 a year. That would put us at $18.20 to the good. So we would at least come out ahead, if not by a huge amount.

But here's the rub: in order to stay ahead, we would have to avoid the dreaded Costco Effect. Because Costco is huge and sells absolutely everything, you can't make your way through the vast warehouse without being bombarded by temptation on every side. Remember that $12 a pound smoked salmon I mentioned before? Throwing a pound of that in the cart would more than offset the $11 we'd be saving on a bag of coffee. And salmon is just the tip of Costco's retail iceberg, which includes everything from pharmaceuticals to furnishings. Compounding the problem, our nearest Costco is a bit off our regular shopping route—so it would hardly seem worth the trouble to go all the way out there just for a bag of coffee or sugar. We'd almost feel obligated to load up the cart with goodies in order to justify the trip. (Granted, they'd be relatively inexpensive goodies compared to what they cost elsewhere—but given that we wouldn't buy them elsewhere, that doesn't qualify as a savings.) Or, worse yet, we might decide it wasn't worth making the trip out to Costco at all if all we needed was coffee—and then our $55 membership would never even get a chance to pay for itself.

So now I'm faced with a dilemma. On the one hand, I'm not convinced that buying a Costco membership would actually leave us with more money in our pockets at the end of the year. But on the other hand, now that I've seen Fair-Trade decaf on sale for $6.50 a pound, I'm just not sure I can bring myself to pay $13 for it locally. So it seems I may be forced to either (a) give up coffee, (b) stock up on it every time we visit my in-laws, or (c) find more friends with Costco memberships who are willing to sneak us in with them.

About Me

I am a freelance writer living in New Jersey, one of the most expensive states in the country, so I have had to hone my bargain hunting skills in self-defense. My husband and I are first-time homeowners and our current challenge is fixing up our house and yard as cheaply and greenly as possible.